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Corporate earnings will continue to collapse in H1, 2009, following the recession that simultaneously hit the U.S., Europe and Japan. According to Bloomberg, the U.S. companies included in the Standard & Poor"s 500 index will see their profit go down 11% in the first quarter and 6.2% in the second quarter.
Bloomberg data indicates that profitability should improve in the second half of the year. Estimates indicate that the situation in Europe and Asia could be even worse, as the demand for consumer goods and exported products is decreasing.
Companies are currently facing a significant decrease in consumer demand, and a lack of liquidities triggered by tighter lending terms. In such context, the U.S. central bank lowered the key rate to almost zero, while governments across the world have bought significant holdings in banks and private companies.
Diane Garnick, an Asset Manager with Invesco Ltd. in New York said: "We hit the peak in earnings in 2007, and in 2009 we"re going to see continued deterioration." The expectations are that the earnings of U.S. companies will increase in 2009, while European companies will see less revenue.
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